Walmart Inc. WMT -0.32% said it will require its employees to use certain hospitals for costly spine surgeries, an effort to weed out unnecessary procedures and lower its health-care spending.
The retailer has been trying since 2013 to encourage employees to undergo the surgeries at hospital systems known for their quality by offering to pay the full cost of the procedures and travel. But not all workers took Walmart up on the offer, and the retailer continued to pay for surgery elsewhere.
Walmart decided to mandate the travel, starting in January, after finding that half of the workers who volunteered to travel ended up avoiding the high-cost surgery even though their local doctors said it was needed, said Lisa Woods, who oversees the design of the company’s health plan.
“It’s important that we ensure our associates get the best care,” Ms. Woods said in an interview.
Walmart declined to say how much it expects to save by the move. The company is self-insured, providing health benefits that cover more than one million people.
The effort is the latest by a large employer seeking to lower health-care costs that have rebounded with the economy and job growth after the last recession and climbed with hospital consolidation.
Recently North Carolina said it is seeking to strike new deals with hospitals and doctors to lower costs for the state’s 727,000-member employee health plan, while General Motors Co. struck a direct deal with a single hospital system to handle the health care for all of its salaried employees in the Detroit area.
“Health-care costs are out of control, and employers are looking for opportunities to do something about that,” said Lauren Vela, a senior director with the Pacific Business Group on Health, an employer organization that works with Walmart on its travel health benefits.
The average cost of family health plans provided by employers climbed 5% this year to about $20,000, of which workers paid nearly one-third, an annual survey of employers by the nonprofit Kaiser Family Foundation showed.